G7 financial leaders reach agreement on digital currencies

Finance ministers of the G7 countries have reached an agreed position on 13 public policy principles for central bank digital currencies (CBDCs), in a move that could pave the way for greater adoption of CBDCs across the world’s leading economies.

According to a statement from the U.S. Treasury Department, the public policy principles will be grounded in transparency, sound economic governance and a respect for the rule of law, in a way designed to foster innovation and the development of new digital currencies for retail purposes.

In a joint statement, the senior finance and central bank officials from across the G7 said that while innovation in money can bring benefits, these must be tempered by regulation to deal with the potential wider public policy fallout.

“Innovation in digital money and payments has the potential to bring significant benefits but also raises considerable public policy and regulatory issues,” the officials said.

“Strong international coordination and cooperation on these issues helps to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for
users and the wider financial system.”

The comments come following a meeting of finance officials in person in Washington, as part of a series of meetings bringing together the World Bank and the International Monetary Fund, under the leadership of the U.K.’s chancellor Rishi Sunak.

In their statement, the officials said central bank digital currencies would ultimately stand alongside cash, providing a safe, liquid alternative for settling payments digitally and efficiently.

“We reaffirm that any CBDC should be grounded in our long-standing public commitments to transparency, the rule of law and sound economic governance. Any CBDC must support, and ‘do no harm’ to, the ability of central banks to fulfill their mandates for monetary and financial stability.”

The development comes as central banks around the world move forward with pace towards launching central bank digital currencies.